Missing the bigger picture? Russian money in the UK's tax havens

In March the
sleepy English city of Salisbury found itself at the centre of a global
diplomatic crisis when the former Russian spy Sergei Skripal and his daughter
were found poisoned by a deadly nerve agent. With the finger of blame pointing
towards the Russian state, the conversation quickly turned to the volumes of
suspected dirty money flowing from Russia into the UK.

In a statement
to Parliament, Prime Minister Theresa May stated that “all the capabilities of
law enforcement” would be brought to bear on serious criminals and corrupt
elites, saying, “there is no place for these people, or their money, in our
country.”

That the UK’s
financial sector is being used to launder the ill-gotten gains of dodgy
oligarchs is no surprise to us, time and again our investigations reveal how
the UK is one the world’s premier destinations for the corrupt and their ill-gotten
gains. And we’re talking about a lot of money: the National Crime Agency
estimates that over £90bn of illicit money is flowing through the UK every
single year.

But how can such
breath-taking sums be washing through our systems unnoticed and unabated?

One answer lies
in the British Overseas Territories. In places like the British Virgin Islands (BVI)
crooks can incorporate so-called ‘anonymous companies’ – corporate structures
which can’t be linked back to them. The secrecy on sale in these British
jurisdictions provides the perfect getaway car for crooks looking to launder
their corrupt profits and distance themselves from their criminal activities.

But aren’t we worried
about Russia? What have the Overseas Territories got to do with it?

Funny you
should ask.

Our new
analysis shows that the flow of Russian money into the British Overseas
Territories dwarfs that flowing into the UK itself.

According to
the latest available data from the Russian Central Bank and the IMF, over the
last ten years, more than 7 times more money has flowed from Russia to the
Overseas Territories than has gone to the UK.

Over this time,
£68 billion from Russia has been invested in them – and the BVI has the dubious accolade of being the second most popular destination
for money leaving Russia.

Now, of course
this isn’t all suspicious or dirty money. Large amounts will be accounted for
by legitimate corporate deals. That said, in amongst this are the proceeds of
crime and corruption.

In one mind-boggling
case, a BVI company linked to the Russian government (according to US
authorities) sent at least $900,000 to another BVI company owned by a Russian
businessman. That Russian businessman was later found to have ties to Syria's chemical weapons programme.

As if that wasn’t enough, the owner of the first company fled to the UK where
he died in suspicious circumstances. A US government report alleged his murder was
personally sanctioned by Putin.

A cursory
glance at recent scandals involving Russian money reveals how the Overseas
Territories make several repeat appearances.

Do you
remember the Russian Laundromat? This scheme, which was exposed by the
Organised Crime and Corruption Reporting Project, laundered at least $20.8
billion out of Russia. Two of the three Russian
businessmen referred to as ‘super-users’ of the scam used BVI companies to
receive over $100 million of laundered money.

Next up, consider
the ‘mirror trades’ scheme – this makes $100 million seem like small fry. One
of the biggest Russian money laundering schemes ever exposed used BVI companies
to move than $10 billion out of Russia.

Many, if
not all, of these schemes relied on the fact that the true ownership of the
companies involved was hidden from view. In lending the corrupt the opportunity
to shroud their business dealings with a veil of secrecy, the Overseas
Territories play a key role in the money launderer’s playbook.

So, if
Theresa May is serious – if there really is no place for serious criminals and
corrupt elites and their money in our country – the answer is pretty simple: stop
the Overseas Territories from selling secrecy. She needs to support them to create
public registers of beneficial ownership to reveal the real people behind the
companies incorporated there.

Next week,
MPs have an opportunity to back an amendment tabled to the Sanctions and
Anti-Money Laundering Bill that would require the UK government to support the
Overseas Territories to create these public registers by the end of 2019.

If these
recent concerns about dirty money in the UK are sincere, politicians should
support the amendment to end the secrecy that allows dirty money to flow around
the world with such devastating - and troubling - ease.